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By Sabrina Escobar

Securing the nomination was only one step in Kevin Warsh's bid for the Federal Reserve chairmanship. To truly clinch the role, he must now begin the complex process of untangling himself from corporate America to avoid violating Fed rules.

Warsh currently sits on the board of United Parcel Service and the e-commerce company Coupang, which operates largely in South Korea. Shares of Coupang were up 2.3% in midmorning trading. UPS stock was flat.

By law, members of the Board of Governors are prohibited from serving as an officer or director of "any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institution, or trust company,

In addition, board members are legally required to devote their entire time to the business of the board, and federal law prohibits non-career full-time employees — chiefly political appointees — from working for outside parties. As part of the Senate confirmation process, nominees typically sign an ethics agreement explicitly promising to resign from specific outside positions to avoid conflicts of interest.

A spokesperson for Warsh didn't immediately respond to a request for comment.

When he was nominated to the Fed board in 2012, current Chair Jerome Powell stepped down from his roles on the boards of D.C. Prep, a charter-school operator in Washington, D.C.; the Bendheim Center for Finance at Princeton University; and the Nature Conservancy of Washington, D.C. and Maryland.

Warsh, who served on the Fed's Board of Governors from 2006 through 2011, didn't join UPS's board until 2012. He joined Coupang's board in 2019.

UPS didn't answer Barron's questions over whether Warsh had made moves to resign from the company's board of directors. A spokesperson directed Barron's to a statement released by CEO Carol Tomé this morning.

"Since joining the UPS Board more than 13 years ago, Kevin Warsh has served as a trusted advisor and colleague," Tomé said, praising his expertise. "On behalf of our more than 400,000 employees, we celebrate his nomination and his willingness to serve our country in this key role."

Coupang didn't immediately respond to a request for comment.

There is one company that Warsh may not be able to completely separate himself from: Estée Lauder. Warsh is married to Jane Lauder, a granddaughter and heiress of Estée Lauder. His father-in-law, Ronald Lauder, is a big Republican donor and close friend of the president.

The family ties didn't prevent his confirmation to the Fed board during his first stint.

Estée Lauder stock was 0.8% lower in early afternoon.

To become Fed chair, Warsh must undergo a confirmation hearing in front of the Senate, which could delay his appointment. Republican Sen. Thom Tillis, a member of the Senate Banking Committee, which is responsible for advancing any Fed nominees, opposes the confirmation of any pick for the job until the Department of Justice resolves its investigation into Powell.

"The Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing criminal intent," he wrote on X on Friday. "Protecting the independence of the Federal Reserve from political interference or legal intimidation is nonnegotiable."

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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